Stocks clocked their worst Christmas Eve ever a few weeks ago with the S&P 500 touching a new closing 2018 low of 2,351.
But since then, the market has been staging an impressive comeback. Since December 24, 2018, here are the performances of the major indexes:
Dow Jones Industrial Average (^DJI): up 9.7%
S&P 500 (^GSPC): up 10%
Nasdaq (^IXIC): up 12.3%
The gains come amid a blowout December jobs report and a wave of comments from Federal Reserve Chair Jerome Powell insisting that the central bank will be patient with rate hikes going forward.
A low in stocks?
So was Christmas Eve a bottom in stocks? Perhaps, said David Bahnsen, founder & chief investment officer of The Bahnsen Group.
“I certainly believe it may have been, and I believe we are deeply dislocated fundamentally at that point,” he told Yahoo Finance. “The Fed, China/trade and the earnings growth outlook are all moving targets! We are even weight neutral in U.S. equities, with exclusive focus on individual companies trading at compelling values.”
Veteran strategist Tom Lee of Fundstrat agrees the bottom in stocks may have been near 2,350 in the S&P 500 but notes that a retest of that level is possible. If the market revisits its Christmas Eve low, Lee thinks it will be a buying opportunity.
Lee’s price target on the S&P 500 for 2019 year-end is 2,850.
However, just because stocks are on a tear after months of declines doesn’t mean the trend is your friend.
“Don’t think stocks are back to their old ways of just chugging along and making easy money,” said Nick Colas, co-founder of DataTrek Research in an interview with Yahoo Finance. “The recent rally is likely due to the end of tax loss selling as we crossed over into the new year.”
Scott Gamm is a reporter at Yahoo Finance. Follow him on Twitter @ScottGamm.
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